The message from the world's top finance chiefs is loud and clear: rampant inflation is here to stay and taming it will take an extraordinary effort, most likely a recession with job losses and shockwaves through emerging markets.
JACKSON HOLE, Wyo. -The message from the world's top finance chiefs is loud and clear: rampant inflation is here to stay and taming it will take an extraordinary effort, most likely a recession with job losses and shockwaves through emerging markets.
Inflation is near double-digit territory in many of the world's biggest economies, a level not seen in close to a half century. With the notable exception of the United States, a peak is still months away.For one, high energy prices, a function of Russia's war in Ukraine, is creating a supply shock on which monetary policy has little effect.
"The global economy seems to be on the cusp of a historic change as many of the aggregate supply tailwinds that have kept a lid on inflation look set to turn into headwinds," Agustín Carstens, the head of the Bank of International Settlements, said. "For the Fed right now – it is crunch time," said Peter Blair Henry, a professor and dean emeritus of the New York University Stern School of Business.
Bigger countries like China and India appear to be well isolated but a host of smaller countries from Turkey to Argentina are clearly suffering.
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